Legislation that has advanced in the House of Representatives addresses sharp criticism the Bureau of Consumer Financial Protection kept lenders in the dark about complying with agency guidance.
On Thursday the House Financial Services Committee approved House Bill H.R. 5534, the Give Useful Information to Define Effective Compliance Act, by a vote of 34 to 17.
A committee statement said the bill was among “12 important pieces of legislation to improve the lives of Americans and protect our financial institutions.”
The bill, also know as the GUIDE Compliance Act, was introduced by Rep. Sean P. Duffy (R-Wisconsin).
It modifies Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
It gives the BCFP, as the agency has been referred to under the Republican administration, clearly defined procedures for issuing guidance. This includes guidance necessary to comply with the law.
The legislation also provides a safe harbor for lenders’ good faith reliance on BCFP guidance.
The proposed law addresses criticism that under the Obama administration, the bureau failed to provide
interpretative guidance that could be relied upon by the industry for compliance purposes, according to Joseph Lynyak III, a partner at Dorsey & Whitney LLP.
“The action by the House Financial Services Committee is an outgrowth of that criticism, as well as both industry and Treasury reports on fixing a broken system,” Lynyak said. “Essentially, at the end of the day, the role of government is not to deliberately keep stakeholders in the dark, but rather, to assist by providing balanced interpretations to achieve compliance.”
